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Despite Challenges, European Air Transport Remains In Strong Position

This year we are celebrating 25 years since ASM (Airport Strategy Marketing) launched - the year was 1993 and Bill Clinton was newly inaugurated, global passenger numbers were just over one billion and Dubai had a throughput of about six million passengers.

Fast forward 25 years and the industry has tripled globally, carrying more than four billion passengers, while Dubai has become the largest international airport, with 80 million passengers.

Over the next two decades, IATA forecasts that the European market will grow at 2.3 percent per annum and will add an additional 550 million passengers a year. The total market by 2036 will be 1.5 billion passengers.

However, at a time of rising wages and oil prices, winners and losers will naturally emerge. Higher spending on labour and fuel – which make up about half of airlines' operating expenses – will continue to put intense pressure on margins.

The stories of Primera Air, Monarch and Air Berlin have highlighted just how competitive the industry has become, particularly in the cut-throat European shorthaul sector, as low-cost carriers continue to aggressively grow their share.

The market also remains highly fragmented. Europe’s top five airlines by capacity had a combined 29.6 percent share during the summer 2018 schedule. Contrast that to the U.S. and the top five accounted for 75.3 percent of total capacity.

Such an intensively competitive market will mean some airlines will need to restructure their costs and operations over the next 12 months, inevitably leading to further consolidation through either joint ventures, alliances or full mergers.

Elsewhere, airlines are also seeking clarity on what will happen when the United Kingdom leaves the European Union in March 2019. Although the UK’s transport secretary Chris Grayling has affirmed that there was “no way that flights will stop” between the UK and the EU, the threat of disruption still hangs heavy.

In October 2018, Ryanair chief executive Michael O’Leary warned that flights to and from the UK could be grounded for up to three weeks in the event of a hard Brexit.

But despite the challenges, Europe’s aviation section remains in a strong position, with growing passenger numbers, carriers expanding their networks and even new airline launches.

Nigel Mayes is senior vice president of Airport Strategy & Marketing (ASM), part of the Aviation Week Network. ASM has supported airports, airlines, tourism authorities and governments in the development of new routes since 1993.

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